Ryden: Edinburgh Office Market Trends Q2 2023
Edinburgh Office Market Trends Q2 2023
by Iain Taylor, Senior Associate, Ryden Office Agency, Edinburgh.
With the strange days of the Global Pandemic now a (thankfully) distant and fading memory, what now for the future of the workplace? Many predicted the traditional office workplace was dead and buried with the emergence of flexible home working practices but this has certainly not been played out here at the coalface of office agency in Edinburgh.
At the end of Q2 2023 we had witnessed total quarterly office take-up across the city of c. 175,500 sq ft which represented a 75% increase over the same period in 2022 when we were just emerging from the last bout of Covid related restrictions impacting on our daily lives. In addition to new take-up, we also witnessed 62,280 sq ft of lease re-gears as many occupiers chose to remain in-situ and extend existing lease arrangements. Deal numbers were also up 37% on the same period in 2022 with a total of 52 transactions (new leases) recorded. Another useful metric we can turn to for a steer on the direction of travel is prime headline rents for best in class office space – this time last year this was around the £38 per sq ft mark; we are now at £42.50 per sq ft and rising!
So what is driving this upward trend in activity? There has certainly been an element of downsizing at play, with many occupiers reaching the conclusion that their more agile workforce can operate from a smaller footprint and have taken the opportunity to repackage themselves into smaller spaces. Whilst some roles have proved that they can function from a home working environment with the same efficiency as in an office environment, employers can still see the huge benefits to their business / organisation in having their employees gather together under one roof – nurturing a culture that is impossible to create from the individual silos of home working. Collaboration is also something which cannot be replicated to the same extent via video or conference calls – there is no substitute for getting people together in a room and bouncing ideas around.
Another heavy influencing factor in this prime office space resurgence is the ongoing push towards Net Zero and ever increasing emphasis on ESG commitments. We are now witnessing a two tier “Grade A” office market in Edinburgh where the very best in class space is pushing ahead of the previous phase of developments which, on the face of it, tick all the boxes of being “Grade A” but scratch beneath the surface and they do not fully deliver on the latest ESG requirements which investors are more frequently demanding.
As per other commercial centers across the UK and globe beyond, the office workplace is alive and well here in Edinburgh – it is simply having to evolve to meet the ever changing requirements of occupiers.
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